i?CCEIVC:)
BEFORETHE
POSTAL RATE COMMISSION
‘WASHINGTON. D.C. 20268-0001
FEB 18
Docket No. R2000-1
POSTAL RATE AND FEE CHANGES, 2000
RESPONSE OF UNITED STATES POSTAL SERVICE
,WlTNESS YACGBUCCl,TD INTERRGGATORIES OF MAGAZINE
.,~ “I PU’BLISHERS OF AMERICA
@lPA/USPS-T25-l-7)
The United States Postal Service hereby provides the responses of
witness Yacobucci to the following interrogatories of Magazine Publishers of
America, Inc.: MPAAJSPS-T25-l-7,
filed on February 4,200O.
Each interrogatory is stated verbatim and is followed by the response.
Respecffilly submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel, Ratemaking
Anthony Alverrb
Attorney
475 CEnfant Plaza West, SW.
Washington, D.C. 20260-l 137
(202) 268-2997; Fax -6187
February 18,200O
I-I 52 f$ ‘00
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
MPAIUSPS-T25-1. Please refer to Table It-2 of your testimony and LR-I-90,
R2000-l-Flats Cost Model-Final USPS.xls.
Please confirm ~thatthe @t cost figures in Table II-2 can be obtained by
8.
running the cost model in R2~OO_l_flats Cost Model-Final USPS.xls for all
scenarios for the Psriodi@s Regultir subclass and that when you run the model
jIese,figures a,ppear tin worksheet “Cost Averaging” under the heading
9eriodicals Regular Cost Averages ~-Normalized Auto-Related Savings.’ If not
confirmed, please explain how you developed the unit cost figures in Table 11-2.
Please confirm that the unit costs in Table II-2 are based on a ten percent
b.
..bundl8 breakage asstimptlop. If not confirmed; what bundle breakage
assumptidn did you use t0 develop the unit costs in Table II-27
Please confin that setting Cell G56 of worksheet ‘Data” to 0% changes
0.
the bundle breakage assumption to 0%. If not confirmed, please explain how to
change the bundle breakage assumption.
RESPONSE:
a.
Confirmed with the following clarification: the unit cost figures in Table II-2
appear on worksheet ‘Cost Avemging’under
Regular Cost Averages-Actual”
and “Periodicals Regular Cost Averages
- Normalized Auto-Related Savings.”
b.
Confirmed.
C.
Confirmed.
the headings “Periodicals
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
MPNUSPS-T25-2. Please refer to LR-I-90, R20QQ-I-Flats Cost Model-Final
USPS.xla Please confirm th8t changing the bundle breakage assumption from
lQ%to 0% and running tha model for the Periodicals Regular subclass reduces
the WEIGHTED ‘AVERAGE MODELED UNIT VOL VAR COST on worksheet
“Scenario Costs” from 6.‘198 cents to 5.534 cents. If not confirmed, please
explain.
RESPONSE:
Confirmed.
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF’MAGAZINE PUBLISHERS OF AMERICA
MPAkJSPS-T25-2. Please, refer to Note (6) on Worksheet “Productivities” of LR~’ ‘i-90, ~R2000 1~Flats Cost Model Final USPS.xls, where lt states: “USPS
Operations.-Akumed to equal l%M 881 BCWOCR.
a.
Please confirm that this note indicates that USPS Operations told you to
.assume that the productivity of an FSM 881 OCR machine is exactly the same as
that of an FSM 881 BCR/OCR machine. If not, please explain.
b.
Please explain USPS Operations’ basis for this assumption.
RESPONSE:
8.
Confirmed that USPS Operations advised that the productivity of an FSM
881 in BCWOCR mode processing barcoded flats should be assumed to
be the same as that of an FSM 881 in BCRfOCR mode processing
nonbarcoded flats.
b.
It is my understanding that USPS Operations considers the throughput of
an FSM 881 in BCRIOCR mode processing barcoded flats to be the same
8s an FSM 881 in ~BRC/OCR mode processing nonbarwded flats. The
pace of feeding the FSM 881 in BCWOCR mode does not change if the
piece is barcoded or not and requiring an OCR read does not slow down
machine throughput. Hence, the respective productivities would be
equivalent.
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
MPAIUSPS-T25-4. Please refer to the ‘Coveraga Factors” and ‘CapacitySOP
Factors” worksheets of LR-l-90, R2060-I-Flats Cost Model-Final USPS.xls. For
this question. please assume that all mail processing facilities haV8 FSM 1000s
and AFSM 100s and no facilities have FSM 881s.
Please wnfirm that the method describad below is the appropriate way to
a.
model unit costs for Periodicals Regular mail under the above scenario: (I) on
the “Coverage Factors” wor@heet. set Cells Fl 1 and ,F31 to 100% and Cells F6,
F7, F8, FQ, FIO, F12. ‘Fl3, F26, F27~,F28, F2Q1F30, F32,8nd F33 to 0%; (2) on
the ‘CapacitySGP Factors” worksheet, set Cells G29,129, G39, and 139 to 100%
and Cells G27,127,037, and 137to 0%; and (3) run all scenarios for the
Periodicals Regular subclass.
b.
If not confirmed, please explain in detail how to run the model so that it
reflects the above scenarios.
RESPONSE:
a.
Not confirmed.
b.
The “above scenarios” reflect a hypothetical mail processing environment.
It is not clear what assumptions are made regarding this hypothetical
environment beyond ‘all mail processing facilities have FSM 1000s and
AFSM 100s and no facilities have FSM 881s.” Assuming that each and
every facility every day has enough machines of each type to process all
volumes, enough time to meet clearance times/dispatch windows, 8nd
enough volume to just’@ the machine run from the local perspective, I
confirm part (8) with the following three additions:
First, regarding the ‘CapacitySOP Facto&worksheet,
cells K30, K40,
M31, and M41 should be set to 100% and cells K32, K42, M32,8nd M42
should be set to 0%.
MPAAJSPST25-4, page 1 of 2
RESPONSE CF US. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
Second, all else remains unchanged. For example, the flows of rejects,
the machinability characteristics of Periodicals mail, and the degrees to
which plants perform Incoming Secondary distribution for larger zones and
the delivery units perform Incoming Secondary distribution for smaller
zones remain unchanged.
Third, ‘unit costs for Periodicals Regular mail” are equivalent to
MODELED UNIT VOL VAR COST and WEIGHTED AVERAGE
MODELED UNIT VOL VAR COST figures and not equivalent to CRAADJUSTED UNIT VOL VAR COST figures on worksheet ‘Scenario Costs’
of USPS-LR-I-90 R2OOO~l~Flats Cost Model-Final USPS.xls. The CRA
mail processing unit costs on worksheet %/?A Cost Pools’of USPS-LR-I90 R2000~l~Flats Cost Model-Final USPS.xls do not reflect mail
processing unit volume variable costs in this hypothetical environment.
Hence, CRA-adjusted costs developed by this method are not appropriate.
MPAIUSPST25-4,
page 2 of 2
RESPONSE,CF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATGRIES OF MAGtilNE PUBLISHERS OF AMERICA
MPAIUSPS-T25-5. Please refer to LR-I-90, R20CX~l~Flats Cost Model-Final
USPS.xls, Worksheets “Vols-Per Reg” and Ilols-Per Non.”
a.
Please wnfim, that all ‘non-sacked” Periodicals Regular Rate flats are
palletized. If not wnfirrned, what percentage of non-sacked Periodicals Regular
Rate flats are palletized?
Please confirm that all “non-sacked” Periodicals Nonprofit flats 8re
b.
palletized. If not, what percentage of non-sacked Periodicals Nonprofit flats 8re
palletized?
RESPONSE:
8.
Confirmed.
b.
Confirmed.
RESPONSE DF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
MPAIlJSPST25-6. Pleas8 refer to LR-I-90, R2000-l-Flats Cost Model-Final
USPSxls, Worksheet ‘Data* and LR-I-88, FINAL-Bundle Breakagexls.
8.
Please wnfirmthat,your model applies the ten percent bundle
breakage assumption to both sacked bundles and palletized bundles.
b.
Please specify the worksheets 8nd cells within your model where the
model applies the ten percent bundle breakage assumption.
Please explain in detail how to modify your model so that it can apply
&erent bundle breakageassumptions to sacked mail and palletized mail.
d.
Please confirm that you,r study of bundle breakage indicated that bundles
in sacks break approximately twice as often as bundles on pallets. If not
confirmed, show much more often do bundles in sacks break than bundles on
pallets?
Please confirm that assuming that bundles on pallets break with the same
tequency as bundles in sacks overstates the per-piece cost (including both piece
and bundle sorting costs) of processing pieces that are presented in bundles on
~’ pallets relative to the per-piece wst of processing pieces that 8re presented in
bundles in sacks. If not confirmed, please explain why you didn’t confirm.
RESPONSE:
8.
Confirmed; the model does not differentiate mailflows of sacked bundles
from mailflows of palletized bundles.
b.
The model in USPS-LR-I-90 R2000~1~Flats Cost Model-Final USPS.xls
applies the ten percent bundle breakage essumption in the following
worksheets and cells:
Format: WorksheetlC8ll (individual cell) or Worksheet!Cell:Cell (cell range)
Productivities!CQ
Mailflow Model!129
Mailflow Model!l46:147
MPAIUSPST25-6.
page 1 of 3
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF MAGAZINE PUBLISHERS OF AMERICA
Mailflow Model!l67:169
Mailflow ModellBA94
Scenario Data!AH3:AH49
Scenario Data!Al3:Al49
Scenario Data!AJ3:AJ49
Scenario DatalAKZAK49
Scenario DatalAL3:AL49
Scenario DatalAM3:AM49
Scenario Data!AN3:AN49
scenario Data!A03:AO49
Scenario Data!AP3:AP49
Scenario DatalAQ3:AQ49
C.
It is not clear what this question intends by “different bundle breakage
assumptions.” If the sole assumption is to apply two distinct bundle
breakage rates 8~~x3s all bundle handling activities, then the explanation
provided below is suitable. If the assumption is to apply different bundle
breakage rates for different bundle handling activities, then other
significant model modifications must be made.
Modifying the model to apply two bundle breakage rates across all bundle
handling activities requires two steps. The first step is to modify the flow
of mail and to capture the modeled unit volume variable costs. The
second step is to modify the averaging of the CRA-adjusted unit volume
V8li8bl8 Costs.
For the first step, start by entering the ‘sacked” and ‘palletiied” bundle
breakage rates with labels into any unutilized cells. Modify the ‘Scenario
Cosfs’worksheet to store modeled 8nd (IRA-adjusted unit volume variable
costs for both sacks and pallets. Modify tha WEIGHTED AVERAGE
MODELED UNIT VOL VAR COST formula in cell GS4 to calculate the
weighted average of the “sacked” and ‘palletized” modeled costs. Modify
MPAAJSPS-T256. page 2 of 3
RESPONSE OF U,.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES OF.MAGAZlNE PUBLISHERS OF AMERICA
the CRA-adjusted unit volume variable costs columns to appropriately
apply the CRA-adjustment.
Modify the RunJlI-Scenarios
macro using Visual Basic to wpy the
‘sacked” bundle breakage rat8 to cell G56 on worksheet ‘Dafa,‘Nn all
scenarios, copying each scenario’s modeled cost to the appropriate cell in
the “sacked” modeled unit volume variable cost column on worksheet
‘Scenario Cosfs,‘wpy
the ‘palletized” bundle breakage rate to cell G56 on
worksheet ‘Dafa,‘and run all scenarios, copying each scenario’s modeled
cost to the appropriate cell in the ‘palletized” modeled unit volume variable
cost column on worksheet ‘Scenario Costs.’
For the second step, modify SACKED: COST l VOLUME and NONSACKED: COST l VOLUME formulae on worksheet ‘Cost Avemging’to
multiply the volumes by the appropriate CRA-adjusted unit volume
variable cost on worksheet ‘Scenario Cosfs.’ Modify TOTAL: COST
l
VOLUME formulae to compute accurate weighted-averages.
d.
If the question’s reference to “your study of bundle breakage” specifically
corresponds to the qualitative study in FINAL-Bundle Breakage.xls in
USPS-LR-I-88, then confirmed.
8.
If palletized bundles break less frequently than sacked bundles over the
life of the bundles, then confirmed.
MPAAJSPST25-6, page 3 of 3
RESPONSE 0F.U.S. POSTAL S,ERVICE WITNESS YACOBUCCI TO
.lNTERROGATORlES OF MAGAZINE PUBLISHERS OF AMERICA
MPAIUSPS-T25-7. Please refer to Table 9 of LR-I-87 and LR-I-90,
R2000~1~Flats Cost Model-Final USPS.xls
Please wnfirrn that approximately eighty percent of Periodicals Regular
Rate Carrier-route byndte.s are presented on pallets. If not confirmed, what
percentage of Periodicals Regular Rate carrier-route bundles are on pallets.
8.
b.
Please confirm that less than ten percent of ADC Nonautomation bundles
8re on pallets.
Please
C.
. confirm that the per-piece cost difference between basic,
nonautomabon :pieces and Carrier Route pieces would be larger if you applied a
more-than:ten-,percent bundle breakage,assumption to bundles in sacks 8nd a
fess-than4en~percent bundle breakage assumption to bundle on pallets. If not
confirmed. pleas8 explain.
If you applied 8 15,.percent bundle breakage assumption to bundles in
d.
sacks and a 5 perce,nt bundle breakage assumption to bundles on pallets, what
would the wst difference betieen basic, nonautomation pieces and carrier route
pieces be?
RESPONSE:
a.
Confirmed.
b.
For Periodicals Regular Rate, confirmed.
C.
The modeled unit cost difference between basic, nonautomation pieces
8nd carrier route pieces would tend to be larger if the assumed bundle
breakage rates
are
applied
at
each bundle handling activity, all other
factors remaining constant. This method of differentiating sacks and
pallets considers containerization effects that Introduce new nonpresortatlon-related bias into cost differences between rate categories.
MPAAJSPST257,
page 1 of 2
RESPONSE OF U.S. POSTAL SERVICE WITNESS YACOBUCCI TO
INTERROGATORIES 6F MAGAZINE PUBLISHERS OF AMERICA
d.
Applying the 15 percent and 5 percent bundle breakage rates across all
bundle handling activities for Periodicals Regular, all other factors
remaining constant, results in e Periodicals Regular CostAverage Actual basic, nonautomation cost average of 23.797 cents 8nd Periodicals
Regular Cost Average -Actual carrier route cost average of 8.154 cents.
The resulting cost difference is 15.543 cents. These numbers W8r8
derived using an approach functionally equivalent to the approach outlined
in the response to MPAIUSPS-T256
(c).
MPAlUSPST257,
page 2 of 2
DECLARATION
I, David Yacobucci, declare under penalty of perjury that the foregoing
8nswers are true and correct, to the best of my knowledge, information, and belief.
MYA
DAVID YACOBUCCI
Dated:
ZIlP/OD
CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document
upon all participants of record in this proceeding in accordance with section
12 of the Rules of Practice.
Anthony Alvefio
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2997; Fax -6187
February 18,200O